Analysis of the gene cluster from Streptomyces avermitilis that governs the biosynthesis of the polyketide anthelmintic avermectin revealed that it contains four large open reading frames (ORFs) encoding giant multifunctional polypeptides of the avermectin polyketide synthase (AVES 1, AVES 2, AVES 3 and AVES 4). These clustered polyketide synthase genes responsible for avermectin biosynthesis together encode 12 homologous sets of enzyme activities (modules), each catalyzing a specific round of polyketide chain elongation. The clustered genes encoding polyketide synthase are organized as two sets of six modular repeats, aveAI and aveAII, which are convergently transcribed. The total of 55 constituent active sites makes this the most complex multifunctional enzyme system identified to date. The sequenced DNA region contains 14 additional open reading frames, some of which encode polypeptides governing other key steps in avermectin biosynthesis. Between the two sets of polyketide synthase genes lie two genes involved in post polyketide modification, one of which encodes cynthochrome P450 hydroxylase that probably catalyzes furan ring formation at C6 to C8a. Immediately right of the large polyketide synthase genes is a set of genes involved in oleandrose biosynthesis and its transglycosylation to polyketide-derived aglycons. This cluster includes eight genes but one is not functional in the biosynthesis of avermectin. On the left side of polyketide synthase genes, Two open reading frames encoding methyltransferase and non-polyketide synthase ketoreductase involved in post polyketide modification are located to the left of the polyketide synthase genes and an adjacent gene encodes a regulatory function which may be involved in activation of the transcription of avermectin biosynthetic genes.